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Policy Updates for CY2012

1) Market Basket Update: The home health market basket percentage increase for CY 2012 is 2.4 percent. After reducing it by 1 percentage point as required by the Affordable Care Act, the CY 2012 HH PPS payment update percentage becomes 1.4 percent. HHAs that do not report the required quality data will receive a 2 percent reduction to the home health market basket update of 2.4 percent, further reduced by 1 percentage point per the Affordable Care Act, for a final HH PPS payment update of -0.6 percent for CY 2012.

2) Outlier payments: Section 3131(b) of the Affordable Care Act requires the following outlier policy:

• Target to pay no more than 2.5 percent of estimated total payments for outliers and
• Apply a 10 percent agency-level cap on outlier payments as a percentage of total HH PPS payments.

For CY 2012 and subsequent calendar years, the total amount of the additional payments or payment adjustments made may not exceed 2.5 percent of the total payments projected or estimated to be made based on the PPS in that year as required by Section 1895(b)(5)(A) of the Social Security Act as amended by Section 3131(b)(2)(B) of the Affordable Care Act. Per Section 3131(b)(2)(C) of the Affordable Care Act, outlier payments to HHAs will be capped at 10 percent of that HHA’s total HH PPS payments.

The fixed dollar loss ratio of 0.67 and the loss-sharing ratio of 0.80, used to calculate outlier payments for CY 2011, remain unchanged for CY 2012.

3) Rural Add-on:  As stipulated in Section 3131(c) of the Affordable Care Act, the 3 percent rural add-on is applied to the national standardized 60-day episode rate, national per-visit rates, LUPA add-on payment, and Non-routine Medical Supply (NRS) conversion factor when home health services are provided in rural (non-Core Based Statistical Area (CBSA)) areas.

4) Payment Calculations & Rate Tables:  In order to calculate the CY 2012 national standardized 60-day episode payment rate, CMS will update the payment amount by the CY 2012 HH PPS payment update percentage of 1.4 percent (the 2.4 percent home health market basket update percentage minus 1 percentage point, per Section 3401(e)(2) of the Affordable Care Act).

CMS’ updated analysis of the change in case-mix that is not due to an underlying change in patient health status reveals additional increase in nominal change in case-mix. Therefore, CMS will next reduce rates by 3.79 percent resulting in an updated CY 2012 national standardized 60-day episode payment rate. The updated CY 2012 national standardized 60-day episode payment rate for an HHA that submits the required quality data is shown in Table 1. These payments are further adjusted by the individual episode’s case-mix weight and wage index.

Table 1 – For HHAs that Do Submit Quality Data — National 60-Day Episode Amounts Updated by the Home Health Market Basket Update for CY 2012 Before Case-Mix Adjustment, Wage Index Adjustment Based on the Site of Service for the Beneficiary

The updated CY 2012 national standardized 60-day episode payment rate for an HHA that does not submit the required quality data is subject to a HH PPS payment update percentage of 1.4 percent reduced by 2 percentage points as shown in Table 2. These payments are further adjusted by the individual episode’s case-mix weight and wage index.

Table 2 – For HHAs that Do Not Submit Quality Data — National 60-Day Episode Payment Amount Updated by the Home Health Market Basket Update (minus 2 percentage points) for CY 2012 Before Case-Mix Adjustment and Wage Adjustment Based on the Site of Service for the Beneficiary

In calculating the CY 2012 national per-visit rates used to calculate payments for LUPA episodes and to compute the imputed costs in outlier calculations, the CY 2011 national per-visit rates are updated by the CY 2012 HH PPS payment update percentage of 1.4 percent for HHAs that submit quality data, and by 1.4 percent minus 2 percentage points (-0.6 percent) for HHAs that do not submit quality data.

The CY 2012 national per-visit rates per discipline are shown in Table 3. The six HH disciplines are as follows:

• Home Health Aide (HH aide);
• Medical Social Services (MSS);
• Occupational Therapy (OT);
• Physical Therapy (PT);
• Skilled Nursing (SN); and
• Speech Language Pathology Therapy (SLP).

Table 3 – National Per-Visit Amounts for LUPAs (Not including the LUPA Add-On Amount for a Beneficiary’s Only Episode or the Initial Episode in a Sequence of Adjacent Episodes) and Outlier Calculations Updated by the HH PPS Payment Update Percentage, Before Wage Index Adjustment

LUPA episodes that occur as initial episodes in a sequence of adjacent episodes or as the only episode receive an additional payment. The per-visit rates noted above are before that additional payment is added to the LUPA amount. The CY 2012 LUPA add-on payment is updated in Table 4.

Table 4– CY2012 LUPA Add-on Amounts

Payments for NRS are computed by multiplying the relative weight for a particular NRS severity level by the NRS conversion factor. The NRS conversion factor for CY 2012 payments is updated in Table 5a.

Table 5a – CY 2012 NRS Conversion Factor for HHAs that DO Submit the Required Quality Data

The payment amounts for the various NRS severity levels based on the updated conversion factor from Table 5a, above, are shown in Table 5b.

Table 5b – Relative Weights for the 6-Severity NRS System for HHAs that DO Submit Quality Data

The NRS conversion factor for HHAs that do not submit quality data is shown in Table 6a.

Table 6a – CY 2012 NRS Conversion Factor for HHAs that DO NOT Submit the Required Quality Data

The payment amounts for the various NRS severity levels based on the updated conversion factor from Table 6a, above, are shown in Table 6b.

Table 6b – Relative Weights for the 6-Severity NRS System for HHAs that DO NOT Submit Quality Data

The 3 percent rural add-on, per Section 3131(c) of the Affordable Care Act, is applied to the national standardized 60-day episode rate, national per-visit rates, LUPA add-on payment, and NRS conversion factor when home health services are provided in rural (non-CBSA) areas. Refer to Tables 7 thru 10b for these payment rates.

Table 7 – CY 2012 Payment Amounts for 60-Day Episodes for Services Provided in a Rural Area Before Case-Mix and Wage Index Adjustment

Table 8 – CY 2012 Per-Visit Amounts for Services Provided in a Rural Area, Before Wage Index Adjustment

Table 9 – Total CY 2012 LUPA Add-On Amounts for Services Provided in Rural Areas

Table 10a – Total CY 2012 Conversion Factor for Services Provided in Rural Areas

Table 10b – Relative Weights for the 6-Severity NRS System for Services Provided in Rural Areas

These changes are to be implemented through the Home Health Pricer software found in the intermediary standard systems.

Additional Information: The official instruction, CR7657 issued to your FI, RHHI, or A/B MAC regarding this change may be viewed at http://www.cms.gov/Transmittals/downloads/R2356CP.pdf on the CMS website.

For more tips on Home Health Billing, contact Imark Consulting, Inc.  www.imarkbilling.com

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